March 2020 - 32

How much do you really know?
One axiom
UNITED POTATO
GROWERS OF
AMERICA
Buzz Shahan
Chief Operating
Officer
everyone should
remember: Few things
are more harmful to
one's life than to know
enough to think you're
right but not enough
to know you're wrong.
Any discussions you
hear about topics in
today's world such as
genetic modification,
nutritional value or
climate change that
omit the hard facts of the matter are probably
political ones and not scientific ones.
In terms of making a profit from growing
potatoes, how much do you really know?
Do you know what the term " inelastic
demand " means?
Do you know the effect that " potato
market inelastic demand " has on your
farm's profitability?
Inelastic demand is when consumer
demand does not change as much as
price changes. For example, when price
decreases 20% and demand increases only
1%, demand is said to be inelastic. This
situation occurs with a vengeance in the
consumer side of fresh potatoes.
Said another way - the consumer
wants only a certain amount of potatoes
and lowering the price does not result in a
commensurate sales increase. The result?
When potato supply rises above consumer
demand, price (the potato crop's value)
tumbles disproportionately.
Another point, here, and this observation
comes directly from a former buyer for the
nation's largest produce retailer, is that
retailers understand inelastic demand and
know that the average farmer has no idea
what it means nor how to deal with it.
Retailers know that even a slight oversupply
INDUSTRY NEWS
ALSUM, OKRAY ELECTED TO WISCONSIN HOF
The Wisconsin Potato & Vegetable
Growers Association (WPVGA) elected Larry
Alsum and Dick Okray to its Hall of Fame
during its annual convention in February.
Alsum is president and CEO of Alsum
Farms & Produce in Friesland. He grew up
on his family's rural Wisconsin dairy farm
near Randolph and is the oldest of eight
children. Alsum took over the farm started
by his cousin, Glen Alsum, following Glen's
death in plane crash in 1981. He was has
worked extensively with numerous regional
and national potato- and agriculturefocused
organizations, including the
WPVGA, National Potato Council, Potatoes
USA and Wisconsin Institute of CPAs.
Alsum Farms & Produce grows 2,700 acres
of potatoes per year and has 200 full-time
employees.
Okray has been a part of Okray Family
Farms in Plover since 1982. He graduated
from Wisconsin-Stevens Point and
briefly taught English in Colombia before
joining the farm. Okray has been active
in potato industry and agriculture labor
organizations throughout his career. In
addition to the NPC, U.S. Potato Board
(now Potatoes USA) and United Potato
Growers Association, Okray has served on
the boards of the Wisconsin Migrant Labor
Council and several charitable foundations.
In 2016, Okray Family Farms received the
NPC's Environmental Stewardship Award
for its work to reduce pesticide risk.
www.spudman.com
32
Spudman.com
of consumer packages will force a reverse
auction among farmer-suppliers, enabling
the retailer to make great deals at the
farmer's expense, and they do. Why not?
Contrarily, a business-oriented potato
producer mitigates the threat of inelastic
demand on a crop's value by: One, holding
price by not revealing an oversupplied
situation; or two, not allowing oversupply to
happen in the first place.
Any discussion you hear about the value
of a potato crop that omits the impact of
good supply administration due specifically
to the effect inelastic demand has on a
potato crop's value is probably one of an
uninformed producer and not that of an
informed businessman.
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March 2020

Table of Contents for the Digital Edition of March 2020
